npower forced to pay out £26m for failing to treat customers fairly

WORCESTER-based power company npower has been hauled over the coals by industry regulator Ofgem for billing and complaint handling failings.

Npower is being forced to pay out £26m as a consumer redress package. The money will be divided between some of the worst affected customers and charity.

And if it fails to meet targets to improve customer service, the regulator will stop npower’s proactive domestic sales activity and advertising until those targets are met.

Ofgem said the action it has taken “sends a strong message to the industry”. 

The regulator said npower’s billing issues affected more than 500,000 customers between September 2013 & December 2014.

It said npower failed to handle complaints effectively within a reasonable timeframe.

Ofgem said that since its intervention npower’s performance has improved, but it must continue to demonstrate improvements to its customers.

Many of npower’s problems surfaced after it introduced a new IT system in 2011. Between September 2013 and December 2014, npower issued more than 500,000 late bills. Some affected customers also received inaccurate bills with little or no detail on how these were calculated.

During this period, npower customers made more than two million complaints with the majority about late or inaccurate bills. npower often failed to resolve these issues promptly, pursued debts which were in dispute and failed to keep its own commitments to customers on billing. This caused significant distress and worry for many, Ofgem said.
 
npower also failed to deal with complaints effectively because of failures with its IT system. For several years, npower has recorded a significant number of complaints incorrectly, leading to unresolved complaints being logged as resolved and multiple records created for one issue. This created follow-up problems for customers.

The supplier did not refer all customers to its complaint handling procedures and in some cases, failed to advise them that they could take their complaint to the Energy Ombudsman if unresolved after eight weeks.
 
Dermot Nolan, Ofgem chief executive, said: “npower failed its customers. Not only have its billing and complaint handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable. npower’s management failed to act quickly enough to protect its customers when things went wrong with changes to its IT system.
 
“It’s important that all suppliers ensure they follow the principles of treating customers fairly at all times.

“The payment of £26m sends a strong message to the industry that we expect them to act quickly and effectively to ensure a good customer experience.”